Does anyone know how they did this?

I wonder if anyone out there, knows how the folks created the amazing flash app that can be seen on the following link ( see below ). I'd really like to create somethings similar, but not with as many options! Any help would be appreciated.

I'm particularly stuck on how they got the different parts of the face to merge with other parts of the face.

i'd be guessing they are using png format images for the various parts, with soft-edged transparency, and they've looked at these combos in layers in photoshop or similar to check colour balance and so on more or less match ...